Do You Pay Yourself?
February 20th, 2013 by Morna
I know we always hear we should do this; yet, how many really do? I know I hear people say, “Wait, I’ll take extra out at the end of the month.” This is particularly true for those who are just starting their business and who aren’t relying on their business to support the household. The thought is to wait until you get some experience and cash flowing in.
So what’s wrong with leaving all the money in your business checking account to build the business? I think it says you don’t value yourself or your business the way you should. If you stick with that approach, it’s also easy to get to burnout. Again, I think it’s related to not truly valuing yourself as a business person. It’s so easy to decide you don’t need to pay yourself.
What should you do? Set aside a certain amount each month to pay yourself. It doesn’t matter how much. Perhaps you decide to pay yourself 10%. If you make $100, then you pay yourself $10; if you make $1,000; you pay yourself $100; if you make $10,000, you pay yourself, $1,000. It really doesn’t matter if you pick 10% or $100. It just matters that you do.
Make it easy on yourself and set up a savings account attached to your checking account and have the funds automatically transferred once a month. I think you’ll be surprised that you’ll always be able to pay yourself.
My question is, do you pay yourself first?
Laura Estes said:
Hi Morna,
This is an important question and ties in with support you get from those around you.
Way back in 1994 when we started Laura’s Sage Country Quilts, my dad, and accountant was still living. A Super Supporter, this was his advice. Be prepared to give yourself 3 years to show a profit. Set an amount that is your monthly income (back then it was $400). Set an amount that you need to keep in checking to cover bills, and work towards that (makes you think first about impulse expenditures). Then any amount over that, place in an attached to checking savings account. About 6 years ago, I decided that was too much money to be sitting in savings, so opened a busines 1 yr CD that I can add to once and withdraw from once without penalty, so twice a year we add there. It was a plan, we stuck to it and it worked. I now have a nice salary and the CD most likely will keep growing, so has become my retirement fund.
This not only keeps my husband on board, but me as well. I no longer feel guilty about saying no to those who think (work at home people have time to just drop everything for them). They learn to treat me like the working woman that I am.